Why Better Supply Chain Management Improves Patient Care

By McKessonNovember 19, 2018

The people who work at your physician practice have a lot on their plates. You want them to focus on patient care, but they’re spending way too much time ordering medical supplies and equipment. Supply chain management is an important part of your business. But even more important are your patients.

In this edition of Ask a Supply Chain Expert, we asked Jayme White, director of technology sales for McKesson Medical-Surgical, how your practice can balance those two responsibilities to produce the best possible clinical and financial results for your practice.

What are you responsible for at McKesson?

White: Our team focuses on driving efficiencies in our customers’ supply chain processes. We help them get better at getting all the medical supplies and equipment they need to provide the best possible care to their patients. That’s everything from assessment to procurement to receiving to reconciliation. We talk with them to understand their challenges and match them with supply chain management solutions that can solve those challenges.

What physician practice supply chain challenges do you most often hear from your customers?

White: We hear a lot of common challenges, and we classify them into three different buckets. The first is the operational aspects of the supply chain. The second is the financial components of the supply chain. And the third is the clinical components of the supply chain.

When you look inside the three different buckets, what issues do you see?

White: The two big operational issues are product standardization and control over internal processes. No one is using the same products. And no one is using the same workflows to procure those products. The two big financial issues are their supply spend and their contract compliance. And the two big clinical issues are product standardization and workflow. Again, not everyone is using the same products. That means no one is proficient at using everything. And if nurses and others are spending too much time ordering things, they’re not spending enough time with their patients.

Is there a common thread that connects all the supply chain issues you’ve identified?

White: Yes. The core issue at physician practices is this: You have clinical staff managing your supply chain functions. That’s not their background. That’s not where their passion is. They’re just not that tied to the operational, financial and clinical aspects of the supply chain that I talked about. There’s a lack of alignment between their expertise and the expertise demanded by good supply chain management. That’s the common thread that we see.

What can physician practices do to improve the operational performance of their supply chain?

White: One of the things we recommend to practices is that they create a formulary: a list of approved items that are proven to work well with their patients. That addresses the product standardization issue. That also addresses the internal control issue. Everyone has to use the same ordering platform to order the same supplies, and those supplies are both clinically acceptable and pricing compliant. Then you can set up certain ordering rules for exceptions. You can set it up as what we call a “soft” formulary, which lets you choose an alternative item or an item unique to a clinician. Or you can set it up as what we call a “hard” formulary, which won’t let you buy an alternative or unique item without prior approval from your administrator.

What can physician practices do to improve the financial performance of their supply chain?

White: I think it’s just understanding where your spend is. You can use technology to know what you’re spending your money on. I know that sounds simple. But for practices that don’t have internal controls over their supply chain, it’s hard to know exactly what’s going out for what’s coming in. You need to be able to match your orders to the needs of your patients so that you’re not spending money on things that you and your patients don’t need.

It’s also about knowing where you stand against your supply budget. Without a formulary and standardized ordering processes, everyone’s purchasing online and buying everything. And before you know it, you’re over budget. That can be especially costly if your staff is buying outside of your purchasing contracts and paying higher prices. Technology can track your spend against your budget in real time to give you more control over expenses. Technology can also monitor your inventory, track your purchasing trends and then make ordering suggestions without you having to think about it.

What can physician practices do to improve the clinical performance of their supply chain?

White: Ordering the right supplies at the right time obviously has an effect on patient care. You never want to be short an item or have the wrong item when a patient needs it. Product standardization also results in safer care. Your staff becomes proficient at using the same supplies and equipment all the time instead of having to learn how to use different things all the time. The biggest impact on care comes from the ability to focus on the patient. You’re not spending time managing inventory or ordering things. And when you’re with a patient, you’re not thinking about whether you ordered the wrong thing or paid too much for it. It’s all about simplifying your supply chain processes so your entire focus is on the patient.

How do supply chain improvements in those three areas translate into better business results?

White: As your workflows become more efficient, the time and money it takes to order supplies drop. That means the cost of doing that part of your business will go down. You’ll also save money on medical supplies and equipment that you don’t need. But the biggest business benefit will come from reallocating your staff to other things that create new revenue opportunities. You could see more patients during the day. You could start doing in-office lab testing. You can schedule wellness visits or do follow-up calls with patients. Those are important performance measures under many value-based care models.

What supply chain trends do you see physician practices taking advantage of in the future?

White: The two I see on the horizon are big data, or analytics, and mobile apps. Analytics will let your practice go beyond tracking supply trends and monitoring formulary and contract compliance. It will give you the ability to do predictive modeling like recommending new supplies and equipment based on how your patient population is changing. It will make recommendations on how to improve your supply chain, instead of just giving you the data and letting you figure it out. Mobile apps will let you handle supply chain management anytime, from anywhere. You won’t have to go into the office and log into your computer to do it. The daily life of whoever manages the supply chain in your office will be much easier thanks to all these new tools.

What’s your favorite supply chain story that you like to tell?

White: We were working with a large physician practice that had about 12 different offices in different locations. Their central accounting department was manually trying to match paper purchase orders to paper receipts to paper invoices from each office. There was a lot of paper going back and forth. There were scanned documents. There were email attachments. We automated everything and eliminated all the paper. What was taking them 200 hours a month dropped to just 20 hours a month. Think of what your practice could do with an extra 180 hours a month.

Editor’s note: Have a question for one of our supply chain experts? Please leave a comment below and let us know what you’d like to see covered in a future edition of Ask a Supply Chain Expert.

McKesson editorial staff is committed to sharing innovative approaches and insights so our customers can get the most out of their business solutions and identify areas for operational improvement and revenue growth.